The manufacturer saw 11 of its sites in Germany raided by prosecutors in May 2017, with the searches said to be linked to investigations "against known and unknown employees at Daimler, who are suspected of fraud and misleading advertising connected to manipulated emissions treatment of diesel passenger cars". The authority said it suspected the emissions control devices were being used in the bulk of Daimler's new Euro 6 diesel auto fleet, encompassing some 1 million vehicles, according to the report.
In a statement issued on Monday, the German transport ministry said: 'The government will order 238,000 Daimler vehicles to be immediately recalled Germany-wide because of unauthorised defeat devices'.
The Mercedes-Benz star is displayed on the front of a Mercedes-Benz vehicle at the annual news conference of German auto giant Daimler AG in Stuttgart, southwestern Germany, on February 1, 2018.
The recall will involve updating the engine control software in Mercedes-Benz C-Class models, as well as its GLC crossover SUV (seen here) and Vito van, a model not sold in North America. Last year, Mercedes-Benz retrofitted roughly 3 million cars with modified emissions controls to bring those cars into compliance with Euro 5 and Euro 6 regulations.
German newspaper Bild Am Sonntag reported that the Federal Motor Transport Ministry believes the majority of Mercedes' Euro 6 diesel engines are fitted with such devices, which could affect as many as 1million vehicles globally. Daimler hasn't contested the existence of the devices, but has argued that the devices may not be illegal.
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Daimler has pledged to work on removing the software and to cooperate with authorities, the ministry said.
Daimler said in a statement only that it "confirmed the recall" and added that "open legal questions will be clarified in appeal proceedings".
Evercore ISI analyst Arndt Ellinghorst predicted the costs for the required software update for Daimler would be less than 100 million euros ($118 million).
'Overall, this outcome should de-risk the stock'.